Establishing an Effective Parts and Service Department Program-Establishing an Effective Parts and Service Department Program

Video Transcription

Video Summary

In this video, Bill Mays discusses the key performance indicators (KPIs) that are important for an effective parts and service department. He emphasizes the importance of tracking and measuring KPIs to assess the department's performance and make improvements. <br /><br />Some of the key KPIs discussed include: <br /><br />- Gross margin: The percentage of sales revenue left after subtracting the cost of goods sold. The benchmark for parts is 30-35% and for service it is 60-65%.<br /><br />- Sales contribution: The percentage of total dealership sales coming from the parts or service department. The benchmark for parts is 20-25% and for service it is 10-15%.<br /><br />- Inventory turnover: The rate at which inventory is sold and replaced. The benchmark for parts is 2.5-3 times.<br /><br />- Customer satisfaction index (CSI): A measure of customer satisfaction with the dealership. It is important to track and improve CSI as it impacts customer retention and word-of-mouth referrals.<br /><br />- Absorption: The extent to which gross margin from parts and service covers the dealership's expenses. A benchmark of 85-100% is recommended.<br /><br />Mays also provides examples and calculations to further illustrate these concepts. He concludes with a discussion on time management and the importance of prioritizing activities that are important and urgent. Overall, the video highlights the importance of tracking and improving key performance indicators to ensure the success of a parts and service department.

Keywords

KPIs

parts and service department

tracking

gross margin

sales contribution

inventory turnover

customer satisfaction index

CSI

absorption